DOLE ALLY OUT AFTER QUERIES ON TRUST ROLE

By Dan Morgan and Anne SwardsonJanuary 15, 1988

David Owen, a longtime close political ally of Sen. Robert J. Dole (R-Kan.), stepped down yesterday as national finance cochairman of the Senate minority leader's presidential campaign after nearly a week of questions about his handling of Elizabeth Hanford Dole's blind trust.

The questions centered on his role as the trust's financial adviser in 1986 when it bought and sold an office building in suburban Kansas City, Kan.

At a hastily convened news conference yesterday, Owen again declined to explain the transaction, citing restrictions imposed by the terms of the blind trust. Because of those restrictions, no one affiliated with the trust has revealed whether the Elizabeth Dole trust or individuals associated with Sen. Dole benefited from the complex deal.

Also unclear is the full extent of financial ties between Elizabeth Dole and Owen. Kansas state records and the Doles' financial disclosure reports show that in 1984, Elizabeth Dole had a loan of at least $100,000 outstanding to a television and motion picture production company headed by Owen.

The company, Golfun Productions, was set up by Owen in August 1983, according to records on file with the office of the secretary of state in Topeka. Both Sen. Dole and Elizabeth Dole report that she had a note receivable from Golfun Productions at the end of 1984.

The company had assets of $58,830 and liabilities of $359,137 at that time. It is unknown if the company ever paid off Elizabeth Dole's loan. Most of her assets were subsequently rolled into the blind trust in which Owen served as financial counselor.

Elizabeth Dole's disclosure statements also show that in 1983 and 1984 she had deposits with the State Bank of Stanley, Kan., of between $100,000 and $250,000. Owen is reported to have sold his controlling interest in that bank in January 1983, but to have remained as a director.

Owen did not take a call to his home last night.

In a related development, documents obtained by Knight-Ridder show that Owen sold 120 acres of his own Kansas farmland to the Elizabeth Dole trust for an undisclosed sum, the news service reported. Owen, it was previously reported, brokered the purchase of the office building in the Kansas City suburbs.

Knight-Ridder reported that Owen made a $139,000 commission on the sale of the office building, and financed the purchase through an insurance company of which he was president. The news service reported that the trust subsequently sold the building to an anonymous partnership eleven months later for a gain of $250,000 for the Elizabeth Dole trust.

In announcing his decision to "temporarily suspend my activities on the campaign," Owen said: "At no time, under any circumstances, did I discuss the transactions of that trust with either the senator or Mrs. Dole."

Campaigning in Iowa, Sen. Dole said of Owen's decision: "That's good. We don't need that in this campaign. In our campaign, if there is an appearance of bad judgment or misjudgment, or somebody has a problem, I think you should just step aside."

William E. Brock, Dole's campaign chairman, said in a statement, "Under the circumstances, we believe it was appropriate for Dave Owen to suspend his participation in the Dole for President campaign."

Donald Campbell, deputy director of the Office of Government Ethics, which is looking into the real estate transaction, said there is "no indication that the Doles had any knowledge, or should have had any knowledge, of what occurred."

Owen, an active Dole supporter for 20 years, has served as Kansas state Republican chairman and as lieutenant governor. Over the years he has had interests in banking, real estate and other investments.

When former Transportation Secretary Elizabeth Dole set up a blind trust in January 1985, trustee Mark McConaghy appointed Owen its investment counselor. McConaghy, a lawyer at the accounting firm of Price Waterhouse, had been chief of staff at Congress' bipartisan Joint Committee on Taxation when Dole was its chairman from 1981-1983.

A third person who has been associated with Dole, former aide John Palmer, also has had a connection with the Elizabeth Dole blind trust, according to documents and articles published by Harris News Service of Kansas.

Palmer's company, EDP Enterprises, served as an intermediary in the sale of the office building owned by the trust in Overland Park, Kan.

In January 1986, 11 months before the sale, EDP received a $26 million government contract through a Small Business Administration program to aid minority businesses. The contract was to provide food services at the Fort Leonard Wood Army base in Missouri. Last weekend Dole publicly acknowledged that he urged the SBA to award the contract to Palmer's firm. Yesterday, however, he said, "I really didn't do very much. I was asked to make a phone call, and I wouldn't do it."

Rep. John J. LaFalce (D-N.Y.), chairman of the House Small Business Committee, this week authorized an investigation into whether there were irregularities or undue political influence involved in the awarding of the contract to EDP.

"A preliminary look at the raw files indicates that there were some irregularities with this contract, but we would not want to indicate there is evidence of undue political influence at this time," said a LaFalce spokesman on the committee.

Palmer, EDP's sole stockholder, is a prominent Kansas Republican who had worked in Dole's Kansas City office. He could not be reached for comment yesterday.

Owen, in an interview Wednesday with reporters from the Kansas City Times, said he had been a consultant to EDP since the firm's inception and had helped set up the financing for it.